ROI and Reward Distribution

Pro-rata shares of the weekly rewards will be distributed to eligible users.

As mentioned previously, a user’s vMRHB balance also determines their pro-rata share of the weekly reward distribution sent to the staking contract. Every Thursday (approx 00:00 UTC) the scheduled number of rewards will be sent to the staking contract whereby each user can see what their expected reward will be if they participate in governance (via executing their voting power). We can compute a user’s expected weekly reward as follows:

$$V{r} = \frac{Users vMRHB}{Total vMRHB}$$

Where (VR) is a ratio-based variable used to identify the users vMRHB weight as a percentage of the total vMRHB.

We can compute pro-rata weekly reward for a single user who has a vMRHB balance as follows:

$$R{w} = V{r} * M{w}$$

Lastly, the estimated vROI (variable return on investment) for the user can be computed as follows:

$$Users {vROI{w}}= \frac{(R{w})(52)}{UsersStaked MRHB}$$

The vROI is just an estimation of what a user can expect to receive based on the value of the variables (Mw, Total VMRHB, etc) computed on that day. This vROI can change daily as all these variables are constantly changing.

It is important to note that the vROI a user sees when they initially stake is not necessarily something they should go by to calculate what they can expect to earn over a year. The vROI calculation is derived by multiplying the users potential reward on a given week (via initialising a stake) by 52 weeks and then dividing by the MRHB Amount to be staked. The weekly reward and total amount of vMRHB is variable so is the ROI, hence why it is called vROI.

The vROI is designed to favor those who stake for longer periods. If we were to assume that all users had the exact same staking periods, there would be no weighted difference in their pro-rata ratios and every user would have a vROI that follows:

$$Average { vROI{}} = \frac{52}{MRHB{w} + \xi } (M{w})$$

Where (MRHBw) is the sum of all (MRHB) values (sum value of all MRHB deposits included in the staked MRHB mapping for the relevant week (w))

Where (Mw) is the scheduled amount of MRHB tokens to be minted for that week.

Where (Ɛ) is a small number such that ensures the APR/vROI calculation is not zero due to no deposits being made into the staking contract.

Case Study

If the average/general vROI is 10% we can assume that if all stakers had vMRHB balances deduced with the exact same coefficients (indicating that everyone is staking for the same time period), then the vROI for all stakers would be the same and equal to the average/general vROI. However, if this is not the case and we have users with different staking periods, then the APR/vROI for each user would fall within some range either higher than the average/general APR/vROI or lower.

It is important that a user’s vMRHB diminishes over time as the staking period approaches zero and therefore so does the user's vROI. For example, if we have a total vMRHB of 1 million, a weekly emission of 5K MRHB and a user decides to stake 1000 MRHB for 104 weeks, the estimated vROI range would be calculated as follows:

• Starting vMRHB: 1000 MRHB * 1 (104-week coefficient) = 1000 vMRHB

• Ending vMRHB: 1000 MRHB * 0.1 (13-week coefficient) = 100 vMRHB

• Starting Rewards: (1000 vMRHB / 1,000,000 vMRHB) * 5000 MRHB = 5 MRHB

• Ending Rewards: (100 vMRHB / 1,000,000 vMRHB) * 5000 MRHB = 0.5 MRHB

Therefore, using the ‘Users vROI’ formula, the users estimated vROI range over the period of 104 weeks would be as follows:

Starting vROI (26%) -> 2.6% at 13 weeks -> ends at 0%